Research for Pricing
However, an essential part of any strategy is a judgment about how much customers are willing to buy a product at a certain price, or the extent to which demand varies with the price (price elasticity).
Some of the ways in which we examine the cost and price elasticity are:
Van Westendorpov model
The polling on customers of a product is trying to determine the perception of the acceptability of the price of some products. It is assumed that there is a minimum price that is below the price that buyers are beginning to doubt the quality of the product, as well as the maximum price that is above the price that customers stop buying the product because of its high cost. Using this model determines the optimal price, as well as a range of acceptable prices.
Research intention of buying
An experiment in which potential buyers questions about the intention of buying a particular product where price is used as the independent variable. This method gets the elasticity of demand for a certain product.
Testing in pairs
Potential buyers are tested on purchase intention whereby, unlike the research intention of buying, and prices vary and individual characteristics of the product. In this way we can find out if customers are willing to pay a higher price for a higher quality product.